Value areas and POC figures for /ESH5 and /NQH5 are posted free every morning HERE.

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Late in the day yesterday, I was filling in for Brad on the Squawk and took a short up against R2 which was also a prior resistance point on the chart. I told listeners that the target would have to be 2011 and would happen overnight more than likely as we entered the short well after 3:30pm already. Note the circled area above which shows how much time was spent sitting right at 2011 last night before breaking lower much later this morning. This is the perfect illustration of how Points of Control are to be thought of as magnets that pull price and hold it there. Always use them as exit points, not starting points.

On to today……….

–Value overlapping to higher.

–Letter “p” formation, thus short covering on open. Is still buying but weaker structure to be carried forward.

–Currrently gapping down around 5.25 with overnight inventory 99.9% net short. Goldilocks gap situation for a fade back to the upside. Look for overnight low to either not be taken out, be taken out and fail to go lower or the market simply finds buyers very early and fills the gap instantly. And while you’re at it (if you’re thinking you might as well be thinking of all scenarios), assume the possibility of none of the above happening and the market sells off hard from the open, has a trending day down and closes 20 /ES handles lower. Do the odds favor that? No, but am I ruling it out as as possibility? Definitely not.

–Overall the market remains in a state of balance and as I discussed in the first paragraph above profile and technical references are working like a charm in this market. The moves may be small, but they are there. Remaining within balance is bullish, only acceptance below 2100 changes the tone.

I got this inside of a fortune cookie earlier this week, I thought it was appropriate to trading….

Value areas and POC figures for /ESH5 and /NQH5 are posted free every morning HERE.

They say March comes in like a lion and out like a lamb. That may be true of the weather, but in the futures market it appears that it may play out quite opposite that. On this first day of trade, /ES is currently gapping down two ticks and as you can see from the graphic below, all overnight action remains firmly in balance, which is where we’ve been.

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Not only is all overnight action firmly contained within Friday’s range but the overnight distribution is very symmetrical with equal amounts of time spent on either side of the settlement. While a move out of balance could happen in either direction I am noting that at these all time highs there is clearly price acceptance which is more bullish than bearish. Liquidation breaks thus far have been very short lived. Again, doesn’t mean a larger one can’t happen but the longer we consolidate without one, the more the odds of having one are diminished.

Volume remains very low and day and scalp timeframe players are continuing to control the ball. Moves have been small as well, although I expect this to change soon.

Value areas and POC figures for /ESH5 and /NQH5 are posted free every morning HERE.

A market full of only small opportunities as of late with ranges being rather tight. Note how the profile distributions show overlapping value with small value areas….

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Yesterday’s high was poor, carry forward if we get back there.

Overnight inventory is almost 100% net short. The TPO POC is pretty prominent at 2109.75. I would expect this level to be retested today. A failure to take out the ONL could set up that move.

Tempo has been slow and moves have been small in this market. Thus tamper down your expectations. Doesn’t mean don’t take the trade if the distance from A-B is only 2 handles, just means get out at the two handles target and move on to the next trade. The volatility is what it is currently. In the same way that we come into a market and assess whether we should trade early or trade later, we also have to ask ourselves are opportunities small or large currently. Whenever you are trading inside smaller value areas with a market that is in balance, the opportunities are generally going to be smaller.

Responsive trade against profile and technical references continues to work in this environment. Last day of the month so there could be some weirdness out there. Just worth mentioning.

Value areas and POC figures for /ESH5 and /NQH5 are posted free every morning HERE.

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New all time highs yesterday but no advance in value. Value completely inside prior day. Balance? Tired? People getting longer and not getting paid? Setting up for liquidation break or strong rally higher? I honestly don’t know and I don’t need to right now to make money today. Close your eyes and repeat that sentence three times in your head. Think out loud, multiple scenarios every day, no bias. You’re not in control. The market gives signals and you take them. Be like water. It doesn’t say what shape it wants to be, the context defines it. If the pail is round, it’s round. If the box is square, it’s square.

The volume POC is actually lower than the prior day and the TPO POC is identical. Again, just information to carry forward.

Value area lows of last two sessions are very close to each other. A larger downward break could occur if there is some acceptance below this area. We are currently trading below.

There is pretty strong divergence between /NQ and /ES futures in the premarket. I don’t know why and don’t really care. Some four letter symbol maybe reported and is gapping way up. The reason never matters. Am just thinking ahead of time that the divergence could continue into the session. If so, it will add to my confidence if the market gives a responsive trade signal.

Overnight inventory is net long but not 100% so. There is no real gap to speak of on the /ES that is fadeable. Yesterday’s action was very choppy due to the fact that 95% of it was happening inside of the prior day’s VA.

Value areas and POC figures for /ESH5 and /NQH5 are posted free every morning HERE.

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New all time high yesterday with just a smidgeon of excess on top. I believe bulls are still in control and will remain so.

Value established higher and away which is bullish with POC near high end of range.

Overnight action is contained completely within yesterday’s value area. I also construe this as bullish as the market is in balance at all time highs and price is clearly being accepted as fair.

VAL at 2108.75 should be a key downside reference today. Note in the profile how it is identical to the 2/20 high which was our prior all time high double top. On the upside, the ONH is just one tick below VAH so this is a reference as well to see if we can break higher again.

Yesterday’s distribution has a number of anomalies in terms of it’s structure. Those are the jagged right edges. They indicate forcing action and relatively low confidence. As we know, overall volume continues to be low in this rally so this should not be a surprise. This is not too high in my hierarchy of profile references to carry forward. Some things are worth more than others, but all are worth a mention and should be noted.

Yellen has her second day of testimony today. I believe the message has already been delivered so unless she has a “wardrobe malfunction” or something, I don’t expect the market to care much.

Value areas and POC figures for /ESH5 and /NQH5 are posted free every morning HERE.

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Very tight inside day yesterday with compacted value area that is contained within the upper distribution of Monday’s double distribution day. Carry forward as bullish.

Overnight inventory is very balanced with about an equal amount of trade on either side of yesterday’s settlement. Additionally there is no gap either as we are down less than a point. Market is in balance, trade later rather than earlier.

There is still no excess on the all time high which was made a couple days ago. I do not think the up auction is finished yet at this point.

As always on the day following balance we can either look above and go, look above and fail, look below and go, look below and fail, or remain in balance. That seems obvious when the market is closed but watch yourself sometimes how quickly it can be forgot and you go down the rabbit hole of the one scenario that you think MUST happen.

Responsive trade continues to work very well in this environment. I circled the base of the spike where even in yesterday’s chop fest the futures held perfectly on a double bottom. Have confidence to place limit orders against areas that have strong odds of being turning points. Successful intraday futures trading often comes down to being the innovator.

Value areas and POC figures for /ESH5 and /NQH5 are posted free every morning HERE.

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-Overnight inventory 99% net short. Close enough where I would be looking for a move back up at some point today to balance that. Remember…doesn’t have to come right away. Friday’s high was poor so there could be more liquidation than what we’re getting in premarket that takes market lower and gets more short term traders short before there is a counter trend rally.

-Double distribution on Friday. Am noting how ONL has come right down to top of spike of single prints. Profile references working, check! That ONL at 2101.25 is the obvious and visual downside reference. A good long would be to take it out and not find enough sellers to take the market lower. Enter long on move back above that point.

–While the value area extended well outside of the consolidation, I still see confidence as lackluster here. I say this just because of the tone of what I’ve been witnessing. The other side of the coin is that there was decent acceptance at the highs in the latter part of the day (Friday) and we did get the POC to migrate far upwards.

–On any weakness, I believe the market should hold well above those three identical settlements that we got from 2/17 to 2/19. Any acceptance below there could put the rally into question.

Value areas and POC figures for /ESH5 and /NQH5 are posted free every morning HERE.

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Three or five days of balance depending on how you look at it. I’m going to say three, with value areas completely unchanged. Something is going to happen soon. I don’t know which direction either but something and when it does get on board.

Overnight action is balanced and inside of yesterday’s RTH session.

Am noting that the last three settlement values are all within one tick of each other. Look at the red boxes in the graphic above. Wow. I would be thinking that if futures recover from this small gap down and trade above that level (let’s say 2096.00 to clear all three settlements) more aggressive traders could initiate longs with the anticipation that the balance will end today and the market will repair the poor highs. Just a thought. Opens and closes are very important levels that many don’t put enough weight on.

Yesterday’s POC at 2095.25 is rather prominent and as such has higher odds of being revisited in today’s trade. Look for early action to fail to get below the overnight low and then trade back through the open to initiate that trade.

Brad and I will probably take some calls today on ShadowTrader Uncovered on tastytrade so if there’s any burning questions you’ve been harboring on anything I discuss in this blog, feel free to call at 855-238-2789 between 2:30 and 3pm EST.

Value areas and POC figures for /ESH5 and /NQH5 are posted free every morning HERE.

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Balancing, inside day yesterday with compacted value area. Look for market to move outside of this range soon.

Small gap down with overnight inventory which is close to 100% net short. There was just one small spike around 7am EST that took futures up above settlement only to fall back into range. As of now we would be opening in balance again, similar to yesterday.

The VAL’s of the last two days are equal at 2090.75. I would watch that level closely today to see if bulls defend it or not. Remember that you don’t want to fade extremes of smaller value areas as they tend to “topple” over easily. In that vein, I would be looking for more initiative action outside of value today.

If the consolidation resolves to the downside, note the gap below which creates an LVN (low volume node) on the composite profile. The gap would start at 2071.50.. I have no idea what will happen but a larger liquidation break would target this area. We do have back to back poor highs with little backing off thus far so this could be a scenario to consider. I would go with any stronger sellers on appropriate internal readings.

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Lastly, the overnight high at 2099.50 is a new all time high and the upside reference for today. While this doesn’t repair the poor highs as it did not happen in an RTH session, I’m carrying it forward and noting that Globex highs are usually not the highs of the move.

Value areas and POC figures for /ESH5 and /NQH5 are posted free every morning HERE.

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–Value broke away just a little yesterday in rather forced action to the upside. While we are just breaking out to new all time highs recently, I keep myself aware of the tempo and feel of prior days to be alert for possible liquidation breaks that I can profit from.

–Overnight inventory is balanced and all inside of yeseterday’s value area. Like yesterday we are opening in balance.

–VAL is just below us at 2090.75. Am going to just watch early trade and see if that holds. I would probably not trade it if we open very close to VAL.

–The gap is 4.25 which would be fadeable if the inventory was 100% net short but it’s not even close to that, so I’m not thinking about a gap fill.

–Yesterday’s high was poor and as such we are seeing the market back off a bit from that area. Could be just these four and a half points, could be more. Probably a day to trade later rather than earlier. Let the market tell you what kind of day it will be. The tone usually remains the same for the morning session and sometimes all day. Sometimes one type of “feel” in the morning and another in the afternoon. Nuances are real and they are the whole game. If you approach this systematically, you’ll fail. The “system” (complete laziness on my part to find a better word) is only the outline or framework. The painting/book/house is then created in an infinite number of ways.

I’m rambling but I hope it triggers some thinking. Thinking about the way you are thinking is the most important type of thinking. Traders spend too much time in thinking about what they are DOING (right vs wrong, technique, etc), but the game is to change your THINKING (seeing, observing, objectivity).

Market Profile Wisdom of the DayLonger term money will not wait until the afternoon to sell, they will sell it all day long. Furthermore, a large seller is not going to wait for a certain level to get hit before commencing their operations.